What Is Derivatives Trading?
Derivatives trading involves agreements between buyers and sellers to trade assets at predetermined prices and quantities at future dates. In crypto, this typically refers to futures contracts—such as expiry or perpetual futures—based on underlying digital assets.
Traders profit by:
- Going long: Buying assets anticipating price rises.
- Going short: Selling assets anticipating price declines.
Types of Orders and Trading Strategies
Position Types
- Long (Bullish): Profit from price increases.
- Short (Bearish): Profit from price decreases.
Order Execution
Open a Position:
- Buy to open long.
- Sell to open short.
Close a Position:
- Sell to close long.
- Buy to close short.
Example: Predict a token’s rise? Buy to open long. Expect a drop later? Sell to close.
Key Order Fields Explained
Trading Products
- Perpetual Futures: No expiry; auto-rolls positions.
- Expiry Futures: Fixed settlement (e.g., weekly, quarterly).
Contract Units
- Crypto-Margined: Collateral in crypto (e.g., BTC).
- U-Margined: Collateral in stablecoins (e.g., USDT).
Position Modes
- Cross Margin: Entire account balance as margin.
- Isolated Margin: Fixed margin per position limits losses.
Leverage
Higher leverage = Higher potential returns (and risks).
Order Types
- Limit Order: Set price/quantity for controlled execution.
- Market Order: Instant execution at current market price.
Amount
Denominated in contracts, tokens, or USDT. Insufficient funds? Adjust leverage or deposit more.
FAQs
1. What’s the difference between perpetual and expiry futures?
Perpetual futures lack expiry dates, allowing indefinite holding (with funding rates). Expiry futures settle at fixed dates.
2. Which is riskier: cross or isolated margin?
Cross margin uses all account funds, risking larger losses. Isolated margin caps risk per position.
3. How does leverage impact my trade?
Leverage amplifies gains/losses. Example: 10x leverage means 10% price move → 100% P/L.
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Disclaimer: This content is informational only. Trading involves risks; assess your financial capacity and consult professionals. OKX © 2025. All rights reserved.
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